Correlation Between Zephyr Minerals and Finlay Minerals

Can any of the company-specific risk be diversified away by investing in both Zephyr Minerals and Finlay Minerals at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Zephyr Minerals and Finlay Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zephyr Minerals and Finlay Minerals, you can compare the effects of market volatilities on Zephyr Minerals and Finlay Minerals and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Zephyr Minerals with a short position of Finlay Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zephyr Minerals and Finlay Minerals.

Diversification Opportunities for Zephyr Minerals and Finlay Minerals

0.52

Correlation Coefficient

Zephyr Minerals  Finlay Minerals

Very weak diversification

The 3 months correlation between Zephyr and Finlay is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Zephyr Minerals and Finlay Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finlay Minerals and Zephyr Minerals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Zephyr Minerals are associated (or correlated) with Finlay Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finlay Minerals has no effect on the direction of Zephyr Minerals i.e., Zephyr Minerals and Finlay Minerals go up and down completely randomly.

Pair Corralation between Zephyr Minerals and Finlay Minerals

Assuming the 90 days horizon Zephyr Minerals is expected to generate 7.19 times less return on investment than Finlay Minerals. But when comparing it to its historical volatility, Zephyr Minerals is 1.73 times less risky than Finlay Minerals. It trades about 0.01 of its potential returns per unit of risk. Finlay Minerals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Finlay Minerals on October 4, 2024 and sell it today you would lose (1.00) from holding Finlay Minerals or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.7%
Values	Daily Returns

Zephyr Minerals  vs.  Finlay Minerals

Zephyr Minerals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zephyr Minerals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Zephyr Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Finlay Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Finlay Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Zephyr Minerals and Finlay Minerals

The main advantage of trading using opposite Zephyr Minerals and Finlay Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zephyr Minerals position performs unexpectedly, Finlay Minerals can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Finlay Minerals will offset losses from the drop in Finlay Minerals' long position.

The idea behind Zephyr Minerals and Finlay Minerals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.